General Trend:
- China to allow more foreign airlines to operate flights into the country;
- Before the announcement by China, the US moved to place passenger flight suspensions on various Chinese airlines
- Shanghai Composite declines by less than 0.5% in early trading
- Major Chinese airlines decline by less than 2% in HK
- HSBC and Standard Chartered rise after the firms are said to have issued their support for the new HK security law, shares later trim gains
- HK listed property developer China Vanke plans to raise HK$7.89B in equity, to use the proceeds to repay foreign debt
- Decliners in Japan include Iron/Steel, Transportation and Real Estate firms; Insurers trade generally higher
- AGC rises over 1% in Japan, announced that it would make the adjuvant for Novavax’s coronavirus vaccine candidate
- Equities in Australia outperform, Financials and Consumer Discretionary firms are among the biggest gainers; Qantas rises over 5% after announcing plan to increase domestic flights by the end of June
- Australia’s April retail sales and exports were in line with the preliminary data
- In April South Korea reported its largest current account deficit in almost 10 years [amid trade deficit]; Bank of Korea sees current account surplus in May
- Malaysia reported unexpected trade deficit in April (first deficit since 1997), exports to the US declined by over 31%
- BOJ Official: Reiterated BOJ has no plans to purchase Municipal bonds
- Protests said to occur in HK’s Legislative Council amid debate on the China national anthem bill
- China’s Commerce Ministry (MOFCOM) sometimes holds weekly news conferences on Thursday
Headlines/Economic Data
Australia/New Zealand
- ASX 200 opened +0.3%
- (AU) AUSTRALIA APR FINAL RETAIL SALES M/M: -17.7% V -17.9%E
- (AU) Australia expected to announce A$688M stimulus package for home construction – press
- (AU) Australia Apr Trade Balance (A$): 8.8B v 7.5Be
- WBC.AU Announces findings into AUSTRAC Statement of Claim issues: failures came due to management and tech
Japan
- Nikkei 225 opened +1.2%
- 5201.JP To make Adjuvant for Novavax’s COVID vaccine candidate
- (JP) Japan Investors Net Buying of Foreign Bonds: -¥499.3B v -¥453.1B prior week; Foreign Net Buying of Japan Stocks: -¥38.0B v +¥74.8B prior week
- (JP) Analysts speculate that Japan will need a 3rd extra budget to make up a ¥100T gap between govt spending and decline in tax rev, Rev seen as coming in well below Japan Finance Ministry expectations – US financial press
- (JP) Japan to submit 2nd extra budget June 8th – Japan press
- (JP) Japan Chief Cabinet Suga: Japan Govt has not made a decision on Tokyo Olympics format; Coronavirus Vaccine not a requirement for holding the Olympics
- (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.4% coupon 30-year JGBs, avg yield: 0.5290% v 0.4260% prior, bid to cover 2.84x v 3.73x prior
Korea
- Kospi opened +1.7%
- (KR) South Korea Fin Min Hong: Q2 GDP could contract more than 2% due to coronavirus, Q3 and Q4 could show improvement if virus come under control domestically and globally – Yonhap
- (KR) North Korea Leader Kim’s younger sister Kim Yo-jong, threatening to cancel inter-Korea military agreement unless S. Korea takes action over anti-North Korea leaflets – KCNA
- (KR) South Korea Apr Current Account: -$3.1B v $6.2B prior (largest deficit in nearly 10-years); Balance of Goods (BOP): $0.8B v $6.7B prior
China/Hong Kong
- Hang Seng opened +1.3%; Shanghai Composite opened +0.3%
- (CN) China Aviation Regulator: To allow more foreign airlines to operate flights into China; Foreign Airlines that are currently unable to operate routes to China may choose one city to operate routes to, starting June 8th – China Press
- (CN) China Aviation Regulator: To allow 37 cities including Bejing will accept international flights
- (CN) Reportedly China state controlled firms have canceled some shipments of goods from US farmers amid rising US/China tensions – NYT
- (CN) China PBOC sets Yuan reference rate: 7.1012 v 7.1074 prior
- (CN) China PBoC Open Market Operation (OMO): Injects CNY70B in 7-day reverse repos v skips prior; Net drain CNY170B v Net drain CNY120B prior
- (CN) China National Health Commission Coronavirus Update for June 3rd: 1 additional cases (1 imported v 1 prior) v 1 prior; Additional deaths: 0 v 0 prior; Additional Asymptomatic cases: 4 v 4 prior
- 5.HK HSBC and Standard Chartered issued their support for the new Hong Kong security law – press
North America
- (US) US Department of Transportation (DOT) issues order suspending the scheduled passenger flights of Chinese carriers to and from the United States, effective by June 16, 2020; to allow as many china flights into the US as China Govt allows US flights into China
- (CN) US reportedly to announce prohibition on Chinese passenger airlines from flying to the US later today; rules expected to take effect June 16th – press
- (CN) US to prohibit China passenger airlines from flying to the US; rules expected to take effect June 16th – press
- (US) President Trump: The economy will be even better with a little bit of time; Has not thought of sanctioning China President Xi over Hong Kong Security Law – Interview
- (HK) Hong Kong Finance Chief Chan: Hong Kong is fearless and has already prepared various contingency plans to weather the challenges, including possible US sanctions – Xinhua
Europe
- (DE) Germany Chancellor Merkel: coalition has agreed to new stimulus package worth €130B, includes lower VAT rates to boost consumption
- (DE) Germany Fin Min Scholz: not all of the €120B in stimulus funds will be financed by new debt
Levels as of 1:15ET
- Hang Seng +0.1%; Shanghai Composite -0.2%; Kospi +0.4%; Nikkei225 +0.4%; ASX 200 +1.2%
- Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.1%; FTSE100 -0.1%
- EUR 1.1241-1.1211; JPY 109.08-108.81; AUD 0.6933-0.6892; NZD 0.6433-0.6405
- Commodity Futures: Gold 0.0% at $1,704/oz; Crude Oil -1.9% at $36.59/brl; Copper -0.5% at $2.47/lb
